When Saving Money Actually Costs You

If you’re like most Americans, your top financial goals probably include upping your savings game—whether that means topping off (or setting up) your emergency fund or pumping up your retirement accounts. And for good reason: A third of Americans haven’t started saving for the future, and 46 percent can’t cover an expected $400 expense.

Cutting costs is an obvious place to start when you’re looking for savings. “There are almost always a few expenses that are relatively easy to scale back,” says Matt Becker, a Certified Financial Planner™ and founder of Mom and Dad Money. “That’s usually the best route to quick progress.”

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Even a couple small wins under your belt—like negotiating a cheaper cable bill or canceling unused subscriptions—can motivate you to ramp up to bigger efforts. And before you know it, you’re making major strides toward your goal.

But there comes a point when obsessing over saving every last dime might not actually make sense anymore. “If that’s your only focus, you really limit the amount of progress you can make,” Becker says. “You can get stuck in the mindset of holding yourself back instead of opening up to all of the opportunities available to you.”

If you find yourself in one of these scenarios, you might be thinking about saving all wrong.

1. You spend more time “saving” than your time is worth.

If you exhaust hours every week hunting for coupons just to save $5 to $10 on groceries, stop and ask yourself: What’s an hour of my time really worth? (Calculate your earnings rate, and you’ll probably discover it’s way more than $5 or $10.) When you consistently save less than your time is worth, it’s time to rethink your strategy.

Start by focusing on simpler savings strategies, like downloading apps and digital tools that essentially do the work for you. It’s possible you’ll still save just a few bucks here and there, but you won’t be wasting precious time. Another option is to zero in on opportunities that save you more than your time’s worth. For example, you might spend an hour or more researching flights and redeeming points and miles for an upcoming vacation. If your hourly rate is $50, and you ultimately save a couple hundred, that’s a clear win.

Finally, you may come to the conclusion that, overall, you can earn more in overtime pay, from a side gig or by doing freelance work than you can save by cutting back. If that’s the case, focus on those efforts instead. “There’s only so much cutting back you can do,” Becker says. “And if you never allow yourself to go the other way and think about how you can earn more, there’s only so much improvement you can make.”

Acorns Grow Incorporated is the parent company of Acorns Advisers, LLC and Acorns Securities, LLC. Opinions belong to contributing authors, not to Acorns Grow Incorporated, Acorns Advisers, LLC or Acorns Securities, LLC. Please consult your financial adviser or investment adviser regarding your individual financial and investment decisions. Articles on Grow from Acorns are intended for educational purposes only and should not be construed as investment or tax recommendations.